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5. WHILE WE RECOGNISE INDIANS MIGHT FEEL THEY WOULD SUFFER FROM HAVING PAID UNDER 1955 ARRANGEMENTS FOR WHAT WE SHOULD NOW BE OFFERING FREE TO OTHERS, WE THINK IT MAY BE POSSIBLE TO RECONCILE THEM TO A DECISION ON OUR PART NOT TO DISTURB THOSE ARRANGEMENTS. WE COULD FOR INSTANCE POINT OUT THAT
(1) THOUGH INDIA'S NEIGHBOURS (PAKISTAN, CEYLON AND BURMA) WOULD NOT BE EXCLUDED FROM SCHEME, THEY DO NOT STAND TO RECEIVE
LARGE BENEFITS UNDER IT.
(11) WE SHOULD CERTAINLY TAKE INTO ACCOUNT EXTENT TO WHICH A COUNTRY MIGHT BENEFIT FROM SCHEME IN ASSESSING ITS NORMAL AID
''ALLOCATION''.
(111) CONVERSELY, IN CONSIDERING, FUTURE AID TO INDIA, ESPECIALLY WHEN NEW MONEY WAS AVAILABLE, WE WOULD TAKE INTO ACCOUNT FACT THAT INDIA HAD NOT BENEFITED UNDER SCHEME, THUS INDIA NEED HAVE NO FEARS THAT INTRODUCTION OF SCHEME MIGHT
PREJUDICE SHARE OF BRITISH AID AVAILABLE TO HER.
6. PAKISTAN BOUGHT ANNUITIES FROM BRITAIN IN 1948 AT A COST OF £8M. ON SAME BASIS AS INDIA. WE SUBSEQUENTLY FAILED TO REACH SETTLEMENT WITH HER SIMILAR TO 1955 SETTLEMENT WITH INDIA, AND 1948 ARRANGEMENTS REMAIN IN FORCE. UNDER THESE, PAKISTANIS PAY THEIR OVERSEAS PENSIONS THEMSELVES, CURRENTLY £280,899 A YEAR, USING FUNDS RECEIVED UNDER ANNUITY. WE WOULD PROBABLY PROPOSE, ASSUMING WE TAKE OVER PAKISTAN PENSIONS,,TO PAY PENSIONERS OURSELVES FROM ODM VOTE, LEAVING PAKISTAN GOVERNMENT IN RECEIPT OF ANNUITY INCOME. WE REALISE INDIA WILL SCRUTINISE CLOSELY ANY SCHEME THAT APPEARS TO DISCRIMINATE IN FAVOUR OF PAKISTAN, AND WE SHOULD PARTICULARLY WELCOME DELHI'S COMMENTS ON THIS ASPECT.
7.
FOR YOUR FURTHER INFORMATION
BURMA'S PENSIONS ARE £293,000 A YEAR AND CEYLON'S £130,000. (WE MAY WELL REQUIRE BURMESE TO MEND THEIR FENCES WITH US ON EXPROPRIATION ISSUES BEFORE WE TAKE OVER THEIR PENSIONS.)
(11) ONLY INDIA AND PAKISTAN PENSIONS ARE PAID UNDER ANNUITIES: EVERY OTHER GOVERNMENT PAYS OUT OF ANNUAL REVENUE.
CONFIDENTIAL
/8. GRATEFUL
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